The Pact at the Heart of Taiwan’s Latest Violent Legislative Brawl

The self-ruled island of 23 million often gets overlooked despite being home to the world’s biggest producers of computers , golf products and high-tech textiles. And when it does garner attention, it’s usually because the legislature had another one of its famous fiery brawls, like the one that occurred last week.

Last Tuesday, lawmakers from the Kuomintang, or Nationalist Party, and the opposition Democratic Progressive Party competed for the speaker’s podium in a fervent debate over Taiwan’s newly signed service industry pact with China. The contest eventually turned violent, with insults and coffee flying through the air – and at least one biting incident.

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While such scuffles may be detrimental to Taiwan’s public image, last week’s fight shines a light on controversy surrounding the new agreement.

Agence France-Presse/Getty Images

The brawl in progress.

The pact, backed by the KMT, aims to liberalize cross-strait investments in a range of service sectors that includes real-estate, banking, e-commerce, beauty parlors, transportation, tourism, cleaning services and telecommunications.

According to Taiwan’s Bureau of Foreign Trade, giving Chinese investors wider access to Taiwan’s service sector, which accounts for 69% of Taiwan’s gross domestic product, could boost the island’s whole-year GDP by 0.57%. The island’s export-reliant economy grew a meager 1.32% year-on-year in 2012 and is projected by the government to increase only 2.4% this year.

The DPP has argued that any move that furthers Chinese influence in Taiwan must be carefully scrutinized. That’s especially the case when the island’s sovereignty and security is at stake, former National Security Council secretary-general Ting Yu-zhou told the Liberty Times, arguing that the pact could spur a wave of Chinese nationals to move to Taiwan.

The Ministry of Economics Affairs said the pact, in line with World Trade Organization standards, pertains only to investment, which means cheap Chinese labor will not be flooding Taiwan’s already crowded job market. Chinese companies must invest $200,000 before they can dispatch up to two Chinese managers to Taiwan, the government said.

Opponents also argue that the benefits from the pact will be enjoyed largely by conglomerates instead of the small and medium sized businesses–the backbone of Taiwan’s economy.

“For the SME business individual owners, they will have to face fierce competition from big powerful Chinese franchises,” said Hung Tsai-lung, the head of Chinese Affairs Committee of the DPP.

Hair salon owners are among those worried that Chinese investors could lure away local talent by offering higher wages. The would force the Taiwanese operators to either raise wages or lower their prices, Taiwan Hairdressing World Association president Chen Te-hsiung was quoted by the Apple Daily as saying.

DPP Chiayi County magistrate Chang Hua-kuan said at a party committee meeting that although Chinese were previously banned from investing in the hotel and transportation, some were already doing so indirectly. Many Chinese tour groups are contracted with Chinese-invested firms, leaving Taiwanese hotels and bus companies with little businesses despite the recent huge influx of Chinese travelers to Taiwan, she said.

Publishing companies have also come out against the pact, saying it’s lopsided in favor of Chinese publishers. Pointing to vastly different levels of freedom of speech, national policy adviser and publishing heavyweight Rex Hao said Taiwanese publishers would be subjected to strict censorship in China while their Chinese counterparts in Taiwan would benefit from the island’s lack of political restraints.

President Ma Ying-jeou said the government has earmarked NT$95.2 billion ($3.17 billion) in safety-net funds to counter any damage the pact might cause to local firms, though the government has not provided details on how those funds might be used.

Despite the government’s fervent efforts to sell the pact, the island appears to remain deeply divided, with nearly 50% of respondents in a survey by Apple Daily saying they thought Taiwan would not benefit from it.

“By setting aside NT$95.2 billion means the government knows the pact will hurt the local businesses. Our national treasury is already running thin while national debt is rising,” northern Chungli resident Alex Chen wrote on his Facebook page. “Where is the government getting this money? If the government already has the money, then why not inject it to the market now?”

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